Health insurance is one of the most common employee benefits. In Spain it also has a tax advantage that many companies do not take full advantage of.
- Up to €500 a year per person is not taxed as a benefit in kind (€1,500 for people with disabilities).
- The limit applies to the employee, their spouse and their children, each separately.
- Only the part of the premium above the limit is taxed.
What the law says
Article 42 of the Spanish Personal Income Tax Act provides that health insurance premiums paid by the employer are not a benefit in kind up to €500 per person per year. The limit rises to €1,500 for people with disabilities.
Who it applies to
The limit applies to the employee and also to their spouse and children, each with their own limit. A family of four can be exempt up to €2,000 a year.
What if the premium exceeds the limit
Only the excess is taxed. If an employee’s premium is €650, the €150 above the limit is a benefit in kind.
Medical network or reimbursement
With a medical network you use the doctors contracted by the insurer. With reimbursement you can also see other doctors and recover part of the cost. Reimbursement is more expensive, so it is worth checking whether your team will use it.
What to check before you buy
- Whether the insurance will cover the whole workforce or specific groups.
- Whether families are included and who pays their share.
- Co-payments and waiting periods: what the employee pays each time and when cover starts.
How it can be offered
The company can pay for the insurance as an employee benefit or include it in a flexible remuneration plan, where the employee allocates part of their salary to the premium. The same tax-free limit applies in both cases.
What the company gains
- It is a highly valued benefit that helps attract and retain talent.
- A group policy usually offers better terms than the sum of individual policies.
- The company decides which groups of employees are covered and whether families are included.
More information on our health insurance page.
Frequently asked questions
Can the employee’s children be included?
Yes. The €500 limit also applies to children, each with their own limit.
What happens to the part above €500?
The excess is treated as a benefit in kind and is taxed in the employee’s personal income tax.
Does it have to be offered to the whole workforce?
No. The company can decide which groups of employees it offers it to.
We compare options from several insurers and help you design the group policy.